Who has first claim?

Our community has successfully been granted an embargo on the properties of two, long term debtors. We are now considering the merits of putting them for sale by auction .

If we get permission to do this and the properties are sold, do the outstanding community fees and legal expenses  take precedence over the outstanding mortage debt? If not, for example, and the mortgage is 100%, is it possible that the community may sell the properties and get nothing?

 My understanding is that the mortgage comes first.  If you push the property to auction then anyone buying the property will buy it including any debts on the property ie with the mortgage.  If the mortgage is high then it is unlikely that anyone would buy the property at auction - the property then becomes your along with all the debt.

Unfortunately i can guarantee you that the bank will be paid first, if there is a mortgage the bank holding the mortgage will take priority over everyone and anything else!

If you have the property details you can order a nota simple, all outstanding debts should show on this document, you will then be able to see how much they owe and if it is worth taking the properties to auction.

Taking into account that if they owe the bank money these will also eventually take them to auction, at least this way though you will have an idea on if or not you will get any money back!

Do the owners live in Spain? Is there anyway you can ask the courts to embargo the salaries or cars or any other belongings in their name??????

Hi Plexx, although I've heard that was do-able I've never actually heard of it happening. Could you give some idea on a timescale (i.e. from the point at which community decide to take action until embargo was granted) are we talking months or years?

.. and is it possible to give any rough indication of debt amount vs time outstanding? (only of course if this doesn't breach any confidentiality etc) ;O)

We have a couple of big debtors so just looking for some sort of comparison. Thanks in anticipation. Pat

At an official local meeting at the Playa Flamenca town hall attended by councillors and bankers we were told that Community Fees have priority over mortgage.

To take a debtor to court can take anything up to 4 years plus, although now they have a fast track system, tho how fast that is remains to be seen!!

I don't think the amount of the debt is reflected in the time to reach a sentencia more a case of how busy the courts are and they are very busy.

Our Community has been granted one embargo but the judge has not rubber stamped it yet ( it was granted nearly a year ago ). On the same day in another court room at the same court house, a debtor with the same amount of outstanding fees (as the one we were granted an embargo) was given 'another chance' by a different judge...................................we are still waiting an out come on that one!!

And niether of them has paid a penny!!

One thing for sure it's unlikey to result in any immediate income to the community and to compound the problem the community could even be asked to pay money into court as depósito caución.

I see this problem many times either as developer or owner does not pay but if they don't have the money .... they can't give you what they haven't got.

I don't have the answer and it's the same as how can a property be sold if the mortgage and other outstanding debts exceeds its current market value?

Something has to give and until all interested parties sit down and talk and come up with a plan nothing will happen.

My view is if you are on a development with unsold developer units then your interest has to be in getting those units sold and new owners contributing even if that means writing off some debt and the same applies to the bank and its inflated mortgage.

Thanks for the responses. It took us just over a year to get to this stage.

I have since been informed that the party that initiates the action, in this case us, will have the priority over funds. Had, for instance, the bank initiated the action, then I am told that they would have priority.